In addition, he said another tariff increase of at least 20 percent is likely in the next 12 months.
It is “unlikely” that Vodafone Idea’s plan to raise funds through a combination of equity and debt will restore its competitive position and reverse subscriber losses, as the amount would not be enough for capital spending, he argued.
“We believe that Vodafone Idea will gradually lose market share due to its weak balance sheet and limited financial flexibility,” a Fitch statement said, adding that Jio and Bharti, on the other hand, are expected to gain market share with SC’s verdict.
Industry fees are expected to rise as users adopt higher-priced 4G plans.
“We expect Jio and Bharti to increase their combined revenue market share to 75-80% from around 70% in the next 12-18 months, at the expense of Vodafone Idea, which will likely lose 50-70 million subscribers in over the next 12 months, it lost about 155 million subscribers in the last nine quarters, “he said.
Reliance Jio could recoup more than half of Vodafone Idea’s subscriber losses, with the rest going to Bharti, the statement added.
While Jio had posted earnings growth before interest tax depreciation and amortization (EBITDA) of 55%, and Bharti reported Indian mobile EBITDA growth of 35% in the first quarter of the current fiscal year, the figures of Vodafone Idea remained stagnant, covering only half of their interest cost.
“The Vodafone Idea auditor expressed a material uncertainty about the company’s ability to continue as a going concern, which, according to the auditor, depends on successful negotiations with Vodafone Idea lenders to waive its repayment rights after of defaulting on their bank loan agreements “, Fitch Ratings. said.
At the end of June, it had a cash balance of $ 470 million (approximately Rs 3,454 crore) which was well below the short-term debt and collateral maturities of $ 3.6 billion (approximately Rs 26,450 crore).
“So far it has paid about $ 1.1 billion of its total unpaid installments of $ 8.9 billion, and it will have to pay about $ 1-1.2 billion a year during FY2021-2031,” he said.
The latest Supreme Court ruling will allow Bharti airtel to pay the remaining outstanding installments in 10 annual payments of approximately $ 600 million (approximately Rs 4,410 crore) as of March 2022 instead of a lump sum.
Bharti’s Indian Mobile EBITDA for Fiscal Year 21 is likely to improve by 30-40% thanks to improved margins following rate increases and 5-6% subscriber growth.
Fitch expects Jio’s mobile revenue for fiscal year 21 to increase 45 to 50 percent, driven by higher average monthly revenue per user (ARPU) and subscriber addition of roughly 40 million.
Vodafone Idea, whose ARPU is about 30 percent, lower than Bharti’s, could raise fees to improve cash flows. Currently, the three telecommunications companies had simultaneously increased rates by an average of 30 percent in December 2019.
“We estimate that the industry’s ARPU will grow around 10 percent in fiscal 21, as users gradually upgrade to a higher rate 4G price,” he said, citing Bharti’s stance that monthly ARPU of the industry should touch around 200 rupees and eventually 300 rupees for sustainability. deal.
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